When kimberly-clark decided to sell its century-old paper-mill business and bet everything on consumer paper products, analysts called it reckless. Within two decades, that “reckless” move turned the company into a global leader outperforming its long-time rival procter & gamble and delivering shareholder returns more than four times higher than the market average.
This transformation wasn’t luck. It was discipline, clarity, and focus guided by a single powerful idea: the hedgehog concept.
This approach comes from jim collins’ classic good to great, which argues that great companies succeed not by chasing every opportunity but by focusing relentlessly on what they can be the best at. (explore the full good to greatsummary and leadership framework for context.)
In this case study, you’ll see how darwin smith, a quiet, humble ceo, took a conventional paper manufacturer and turned it into the company behind kleenex and huggies a masterclass in clarity through simplicity.
By the end, you’ll understand not just what kimberly-clark did, but how you can apply the same disciplined focus to your own business.
Meet kimberly-clark
Founded in 1872, kimberly-clark was best known for making coated and newsprint paper solid but uninspiring products. By the 1970s, the company was profitable but stagnant, trapped in the “good” zone collins describes.
Darwin e. Smith took over as ceo in 1971. He wasn’t a charismatic visionary. He was a reserved lawyer who wore cheap suits and avoided the spotlight. Yet beneath that humility was an extraordinary resolve the hallmark of level 5 leadership, another of collins’ good to greatleadership principles.
At the time, kimberly-clark faced an identity crisis. The paper industry was capital-intensive, low-margin, and brutally competitive. Consumer products, however, offered higher profitability but required new capabilities in branding and marketing.
Smith saw the writing on the wall. The company’s future lay not in selling raw paper but in creating household names consumers trusted.
The bold pivot began.
Understanding the hedgehog concept
The hedgehog concept teaches that greatness comes from focusing on the intersection of three circles:
- What you can be the best in the world at
- What drives your economic engine
- What you are deeply passionate about
Smith and his executive team realized that kimberly-clark could never be the best at making generic paper pulp. But it could be the best at converting that pulp into high-value consumer products. The company’s economic engine would be driven by profit per consumer brand, not tons of paper produced.
That simple clarity changed everything from capital allocation to hiring decisions to marketing strategy.
Kimberly-clark sold its mills (including the original mill in kimberly, wisconsin) and poured resources into building its consumer divisions. It launched aggressive marketing campaigns for kleenex, huggies, and scott products, eventually turning them into global household names.
(to understand how simplicity drives consistent success, explore our article on the hedgehog concept framework.)
Implementation challenges
The transformation was not easy. Selling the paper mills shocked the market and even many employees. Industry analysts accused smith of destroying the company’s foundation.
Obstacle 1: investor skepticism
stock prices dipped as wall street doubted the move. P&g dominated consumer products; how could a mid-size paper manufacturer compete?
Obstacle 2: cultural resistance
inside the company, some long-time employees clung to the paper-mill identity. The shift required retraining, layoffs, and a new mindset that focused on innovation and brand.
Obstacle 3: market competition
entering the consumer-goods space meant facing giants with deeper pockets. Kimberly-clark had to differentiate through agility and branding discipline.
Smith tackled these challenges by combining humility with fierce determination the essence of level 5 leadership. He didn’t respond to critics with speeches; he let results speak. He invested heavily in r&d, revamped marketing, and nurtured a culture of discipline.
As collins notes, this was not a single miracle moment it was the flywheel effect in action. Year after year, the small, disciplined steps began to compound. (learn how momentum works in our flywheel effect breakdown).
The results: from average to exceptional
Within twenty years, kimberly-clark achieved what few dared to imagine:
- Shareholder returns outpaced the general stock market by 4.1×.
- Kleenex and huggies became category leaders worldwide.
- The company beat procter & gamble in multiple consumer-goods categories.
- It built a sustainable growth engine centered on branding, innovation, and consumer trust.
Before: kimberly-clark was a regional paper supplier, dependent on volatile raw-material markets.
After: it became a global consumer-goods powerhouse with some of the most recognized household brands on the planet.
This was not a flashy turnaround. There were no massive restructurings, no charismatic speeches just relentless focus and disciplined decision-making guided by the hedgehog concept.
Financial historians point to kimberly-clark’s 1971-1995 performance as one of the strongest long-term examples of strategic transformation in modern business.
Expert analysis: why it worked
The kimberly-clark story works because it aligns perfectly with collins’ research insights:
- Clarity beats ambition. Smith didn’t try to do everything he chose one clear direction and committed fully.
- Discipline replaces bureaucracy. By empowering responsible people, the company eliminated layers of management and accelerated execution.
- Momentum compounds. Like a flywheel, each small disciplined act reinforced the next, creating unstoppable growth.
From a leadership perspective, this case is the embodiment of good to greatprinciples: humility at the top, focus at the core, and consistency in execution.
Simplicity, focus, and faith
Kimberly-clark’s transformation proves that greatness doesn’t require genius innovation it requires clarity, courage, and consistency.
By applying the hedgehog concept, darwin smith turned a stagnant paper company into one of the world’s most respected consumer-goods businesses. His quiet strength and disciplined focus continue to inspire entrepreneurs today.
For anyone building a business, the lesson is simple: greatness begins when you decide what not to do.
Ready to apply these insights? Start with our complete good to greatsummary, then explore our deep dives on the hedgehog concept and level 5 leadership to build your own roadmap to lasting success.
